Trading Stocks and Buying Bonds in Brazil
by habits on Mar.13, 2010, under investment
I recently made a research regarding high yield fixed income and discovered that Brazil has the highest real interest rate in the world. Being curious I decided to research further into the Stock and Bonds Market in Brazil Market.
When I learned about Brazil in the past I always thought of high inflation, and an instable financial environment. After rating company Moody’s downgraded the Brazil to BB- in 1989 the consequences were far-reaching. However in the last decade the situation has dramatically changed and nowadays Brazil is the continent’s most important economy and on its way to become one of the most important economies in the world. The Brazilian currency Real is the most valuated compared to the dollar for three consecutive years and the Brazilian Stock Market rallied in 2009 almost 90%.
On the biggest Brazilian Stock Exchange Bovespa investors can trade stocks, fonds and derivatives while the BM&F trades currency futures. The exchanges have been merged some months ago into BM&FBOVESPA.
The spectrum of investments is broad and very well and closely regulated by the CVM (Comissao de Valores Mobiliarios).
As a foreign investor I can basically apply the same investments as a local investor, however I must appoint a Brazilian representative to be the responsible for my accounting. As far as taxes are concerned foreign investors are tax-exempted unless they are resident in a tax haven.
